Germany clarifies VAT e-invoicing requirements
The EU Invoicing Directive 2010/45/EU issued in July 2010 required Member States to establish tax legislation by mid 2012 for implementation no later than January 2013. The Directive represented another step forward in harmonisation, designed to standardise VAT invoicing. A major section related to electronic invoicing or e-invoicing. It specified that e-invoices should be treated in the same way as paper invoices, without particular conditions being applied.
Germany, ahead of time, introduced German VAT e-invoicing simplification within its legislation in September 2011 back-dated to July of that year. It was considered the early move was in recognition of the efficiency gains that could be achieved by German business using electronic invoicing. Within the legislation, it provided that e-invoices would be acceptable subject to any of three conditions, those being certificated e-signatures, use of EDI systems, or what was termed as “internal controls” designed to check the authenticity and origin of the invoice and its details.
The first two provisions had already been in place but the third was new. In itself, it represented a significant simplification change in respect of allowing businesses to send pdf invoices, with these being subject to a checking procedure. No particular internal control procedures were stipulated by the Ministry, leaving businesses to establish a satisfactory check trail on invoice authenticity, content substantiation, and legibility. The legislation required that whatever procedure was established, it should be documented.
In a letter of 2 July 2012, the Ministry has provided clarification, indicating that a formal documented internal control process is not required within the legislation. The responsibility, however, for acceptance of the invoice still remains with the recipient. Standard controls such as goods received advice documentation, invoice origin, format, legibility, and detail check processes would still be expected in order to support the right of input VAT deduction. The provisions outlined in the letter are retrospective to 1 July 2011.
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